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Opening Bell: 5.23.07

Alcan: Alcoa takeover bid is inadequate (AP)
Canadian aluminum firm Alcan has rejected Alcoa's takeover bid, calling the offer inadequate. However, this hardly means that it's a done deal. Either Alcoa will come back with a "sweetened" deal, or a third (or forth) party will emerge and get into a bidding war. If nobody else in the industry wants to take a shot, there's always private equity. Apparently Alcoa has actually been interested in the company for two years now, which further suggests that the company won't go quietly into the night. Perhaps Alcan should listen to the Wall St. analyst that thinks it should do the "pac-man" defense and purchase Alcoa. That'd be fun for us.
Tate Says Splenda Costs to Hurt Profit; Shares Fall (Bloomberg)
Apparently, all is not well in the world of Splenda. The company that makes the yellow-packeted stuff has said that increased production costs, legal expenses to defend the patent and, oh yeah, poor sales, will work together to hurt the company's profits. That last one seems sort of thrown in there, but it's probably the most serious issue. After all, a hit isn't much of a hit if people aren't using it as much. But what are people turning to now? Inquiring minds want to know. Seriously, they're not going back to regular old sugar again, are they?
Fannie, Freddie Regulation Advances (WSJ)
An observer from another planet would have a very hard time figuring out what the deal was with Fannie and Freddie. That's a joke. An observer on this planet that follows these things closely would have a similarly hard time. First of all, there's the fact that the companies have never been particularly good about reporting financials, which is usually how you get delisted -- but that's never even been an issue for these guys. Then there's the fact that they're public, for-profit enterprises, that are are basically subsidiaries of the government. What's really odd is that nobody has picked up on the fact that all of their problems is due to their odd quasi-public status, and not in spite of it. If anyone had realized this, it'd be highly unlikely that the government would think the solution is more regulation and oversight, but that's the way things go.
Avandia Concerns Reopen a Wider Debate (WSJ)
On Monday, news that GlaxoSmithKline's diabetes drug Avandia could lead to an increased risk of heart attack dinged the stock pretty bad. Even if the drug isn't pulled from the market, it's likely that patients will seek out alternatives. But, as is always the case with these kinds of things, once a problem is discovered with one drug, people start to hunt for others in the same family that use the same method of action. And there's a host of potent drugs out there and in development that share similar characteristics to Avandia. Definitely worth a read. Meanwhile, if you're interested in reading more, one of our favorite Journal writers, Carl Bialik, "The Numbers Guy", tries to clear up some of the difficult statistics.

Google funds biotech venture started by co-founder Brin's wife (San Jose Mercury News)
Yesterday it was announced that Google has invested a few million into biotech startup 23andMe. First of all the name. 23 obviously refers to chromosomes, and the "andMe" part refers to the fact that the company will analyze your chromosomes and tell you about yourself. Apparently the company does genetic social networking, allowing people to learn and connect with people who share genetic similarities. And so this explains the Google angle, since it's really an information play as opposed to a pure biotech thing. Oh, and there's that little part about how the company's founder is married to Sergey Brin. So in light of all that, the whole thing makes sense. Shockingly, corporate governance experts have praised the company's approach to the situation.
Trying to Find the Upside After a Scandal (NYT)
When we saw the ads on the subway exhorting us to "find the upside of risk", we thought to ourselves "Marsh? They're still around?". Yeah, we knew that they'd been hanging around for awhile, but we'd pretty much forgotten about the scandal-ridden company. The ads did get us thinking, though not about anything in particular. Well, that's not totally true. We did wonder whether advertising "risk" is really best approach. Granted, you can't have success without risk. But risk for risk's sake probably won't appeal to too many people. Certainly nobody's going to seek out Marsh & McLennan's services just to add a little risk to their lives.
Food Safety Joins Issues at U.S.-China Talks (NYT)
Not surprisingly, food safety was on the plate, as envoys from China discussed trade with the US. The whole pet food, pig food and now toothpaste thing really couldn't have come at a worse time. It's hard enough for China to defend the trade gap, even though there's nothing for it to defend. The whole thing is probably a little unfair to the government, since it's not an easy task to monitor that stuff. What's more, politicians seem genuinely concerned about the issue over there, so it's not as if they've ignored it.
Uh-Oh: Front Page WSJ "Why Market Optimists Say This Bull Has Legs" (The Big Picture)
Contrarian indicators always abound, but is there a Wall Street Journal cover jinx a la the famed Sports Illustrated jinx? Barry Ritholtz worries that the journal has an article explaining why the current rally has legs, noting that the last time the paper ran something similarly optimistic, a big fall was in the cards. But, Ritholtz still doesn't believe the end is near, noting that sentiment measures still aren't off the charts the way they would be if a major fall was in order. Still, he points out that despite all the talk of a rally, the US market has underperformed overseas markets over the last few years. That's not really so surprising though, is it? The US market represents a mature, stable economy. During these past few years, the economies of emerging markets have exploded, so it's only natural that their stock markets would follow.
Dow Jones's Bancrofts Set Private Meeting Over Offer (WSJ)
There's nothing here that changes the story or makes it any less of snoozer (at this point), but apparently some members of the Bancroft family are going to get together to discuss... something. Not sure what that will be or what will come of it, but they're talking.